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Coal off-take improves to 52 MT in July after lockdown relaxations

Niti Kiran     September 8, 2020

Coal off-take improved sequentially in July to 51.7 million tonnes (MT) thanks to gradual relaxation in the nationwide lockdown. It, however, contracted by 8.3 per cent from a year-ago period. Consumption of coal by end-user industries also improved marginally from 54.2 MT in May to 56.7 MT in June 2020, though, on a year-on-year basis consumption of coal in June was lower by 19.8 per cent.

Domestic coal production continued to be lower both on monthly and yearly basis for the fourth straight month. "High inventory and lower off-take of coal by end-user industries such as power, steel and cement have impacted demand and consequently production of coal," said a CARE Ratings report. Production of coal continues to fall due to high stockpiles and slower than anticipated resumption in business activities. The production stood at 45.5 MT during the month, declining 5.5 per cent and 3.8 per cent on a yearly and monthly basis, respectively.

Coal India Ltd (CIL) which accounts for 80 per cent of domestic coal output announced provisional figures for August 2020 which showed a 7 per cent y-o-y growth in coal production. "However, this was mainly due to lower coal production in August 2019 (-10.4 per cent) because of heavy rainfall and law and order problems. CIL's coal production fell by 0.5 per cent in July 2020 when compared to June 2020," the report added.

Total coal despatches improved marginally in June and July on a m-o-m basis due to phased relaxations in lockdown measures but remained 25 per cent lower from pre-COVID levels and 8.3 per cent lower compared to July 2019. Power sector consumes almost 80 per cent of total coal produced. During April-July FY21, 78 per cent of total coal despatches were to the power sector. Despatch of coal to power sector fell by 19.7 per cent during April-July FY21 compared to the corresponding period of FY20. "Despatch of coal to non-power sector witnessed even sharper contraction. During the five-month period despatch of coal to steel, cement and sponge iron sector contracted by 18 per cent, 46.1 per cent and 28.8 per cent, respectively," the report said. 

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